In a conversation with an industry veteran about the current layoff crisis, “We’re not out of the woods yet” – -.

2023 was a great year for gaming with the release of many high-profile titles such as Alan Wake 2, Baldur’s Gate III, Hogwarts Legacy, Starfield and Marvel’s Spider-Man 2. But behind the scenes there were problems as studios around the world began laying off staff. Unfortunately, this year has brought no relief, and the worrisome trend has only intensified as even console manufacturers like Sony and Microsoft have closed several of their studios.

But maybe times are finally changing for the better? Earlier this summer, we met Ian McGregor, chief marketing officer of Green Man Gaming, at the Sweden-based games conference Nordic Game 2024. In addition to his current job at the digital games retailer, McGregor has previously worked for companies such as Activision and EA, so he knows the industry inside out, especially when it comes to the business side of things. And while he was certainly concerned about the current environment, he also told us that the tide could turn quickly, offering better times for the industry.

“Thousands have been affected, which is terrible,” he said. McGregor told us about industry layoffs. “But I think the first thing to say is that all industries work in cycles, it’s not just games. And clearly we are in a cycle of downturn where companies are looking to cut costs, reduce headcount and reduce their risk. It’s all about balance sheet exposure, and companies are looking for ways to reduce risk.”

“In terms of how we got here, there is no country that hasn’t been affected globally. Interest rates have changed, borrowing money is now more expensive, and where people wanted to invest that money – Silicon Valley – the cost of people has gone up dramatically and the cost of technology has gone up dramatically. I think all of those things have created the perfect storm. If you’ve made an investment based on borrowing money at a low interest rate, and those investments haven’t worked out, or haven’t broken even, it creates a perfect storm, and unfortunately it’s people, our colleagues who suffer.”

Although changes in the general economy on the production and investment side have led to difficulties, the good news is that demand for games is still strong among consumers. Video game analyst Newzoo suggests that the market for console and PC games grew 2.6% to $93.5 billion in revenue last year, rising to an estimated $107.6 billion in revenue in 2026. Other sources suggest a similar growth trajectory. Clearly there is money to be made in the video game industry, but it may not be the same kinds of games that will generate the most revenue in the future.

“The consumption of games has not declined, and if you are a creator of great content, that great content will sell. Games worldwide will increase. Billions and billions of dollars are being generated, so I don’t think we will see a financial decline. But what I do think is that many of the studios that have been disappointed or let go by their publishers will look for other markets. Gamemakers are incredibly creative and resilient, and I think we will see a real wave of independent titles that will push the boundaries of creativity and put pressure on the financial stranglehold of AAA titles. And I think that will be good for the industry”, says McGregor.

Of course, the rise of indie games has been ongoing for quite some time and only seems to be increasing as more digital storefronts and publishers have emerged over the years – as well as new ways of distribution such as bundles and subscription services. Green Man Gaming was launched in 2010 as a seller of digital games. Today, they stock more than 10,000 games from more than 2,500 developers and have expanded into distribution and even publishing (published titles since 36 2015). This gives the company important insights into the market, and, perhaps not surprisingly, McGregor believes third-party publishers play a crucial role in promoting games.

“The eternal battle, whether you’re a publisher or a developer, is about discovery. And I think developers place all their bets on, for example, just selling on Steam creates a smaller chance for them to be discovered. I think the benefit of third-party sellers is that it gives consumers access to more games and gives brands access to more consumers. If you look at the top 150 digital retailers, they have an audience of about 100 million people, and for your game to be successful, you have to deliver reach and get people excited about the games and the things you make.”

Whether smaller titles, AAA cash cows or the ever-expanding mobile market will be the driving force, the video game market seems poised for a revival once the current downturn is over. But how long do we have to wait before this happens? McGregor is cautiously optimistic.

“I don’t think we are out of the woods yet. I think it will take another six months and then the market will settle down. And then I expect we will see investment shifts from the U.S. back to European countries, where the cost of talent is sometimes cheaper.”

Time will tell if he is right – at least we hope he is right, and that the wait will be short.